Business Environment Assignment - British Airways

Introduction

 

The contemporary business landscape is characterised by an intricate interplay between internal and external drivers that collectively create an organisation's operating environment. This dynamic landscape, consisting of factors both within and beyond the immediate control of an organisation, has a profound influence over its strategic decision-making processes. In order to attain levelled profitability and establish a competitive advantage, organisations are forced to develop and implement responsive strategies that can navigate these environmental dynamics. In an era characterised by accelerated technological revolution, evolving consumer habits, and increased global interdependence, the ability to adapt quickly and innovate has become a success determinant across all industries, particularly in the fast-moving and capital-intensive aviation segment (J.P. Morgan Research, 2025; McKinsey & Company, 2025).

This comprehensive analysis performs a thorough examination of British Airways' business context, examining the intricate set of elements influencing its operations. The analysis delves into the company's organisational structure in depth, examining the mechanisms by which its internal functioning supports it or is subjected to pressure from the external environment. The study also examines British Airways' resource management strategies, examining the advanced vehicles through which the airline aligns its principal assets—from human capital to its extensive fleet—against shifting market needs and economic conditions. A critical portion of this inquiry is dedicated to analysing the pervasive impact of local and global considerations within British Airways' organisational decision-making. This encompasses examination of how geopolitical trends, economic cycles, and regulatory frameworks at the national and international levels trigger ongoing strategic realignments. The paper ultimately examines British Airways' compliance with Corporate Social Responsibility (CSR), revealing its ethical considerations, environmental sustainability, and broader social contribution, recognising the growing prominence of sustainability within the aviation industry (Al-Qirim, 2025; Belyaeva & Belyaev, 2024).

Task 1: Identify the purpose of different kinds of organisations.

Organisations necessarily arise out of a social agreement between a myriad of stakeholders who combine their collective efforts to achieve one overarching purpose. Throughout history, even while its external environment naturally constitutes an organisation's policies and strategic intentions, the organisation itself is a distinct operating and legal entity from the above environment. The global economy of today is one of raw diversity of organisational forms, each with its defining purpose and operational philosophy. These can be broadly categorised into five inherent archetypes:

Commercial entities operate within the business world with the goal of being profitable and creating wealth for their shareholders. Their business models and daily choices are framed with the sole objective of revenue growth, cost minimisation, and ultimately profitability improvement. British Airways is a large commercial entity motivated by market demand and shareholder aspirations in the airline industry business landscape. As a commercial entity, British Airways is driven by demand in the market and shareholder aspirations in the airline industry business landscape.

Non-profit organisations essentially differ from their for-profit counterparts in the fact that they do not have maximising financial returns as their sole purpose. Instead, their existence per se is to serve a public good, address some social problems, or improve community welfare. Any profit that they generate is channelled into their social or charitable aims, not to investors or owners.

Public Sector Organisations: They are largely owned, controlled, and broadly funded by government agencies at the local, regional, or national (federal) level. While some may have self-financing business models to a certain degree, their fundamental mission is the delivery of core public services, including healthcare, education, infrastructure development, and public safety. Their accountability is mostly to the public and elected officials.

Non-Governmental Organisations (NGOs) are free from government control and are inclined to avoid undertaking profit-based business ventures. They are inclined to be supported by volunteer donations, private donations, and public grants. They typically have only one major aim, which is to advocate and support specific social, environmental, humanitarian, or human rights causes, usually transnational in nature, to deal with global issues.

Co-operative Organisations: Led by democratic principles, co-operative organisations have equal ownership and decision-making power among members. This is based on the principle of "one member, one vote," in that decisions reflect the interest of all members rather than being based on financial investment alone. Benefits are usually distributed among members in relation to the degree of involvement rather than financial contribution.

Analysing the extent to which the organisation meets the goals of different stakeholders.

British Airways is an internationally acclaimed major airline that well comprehends that its long-term success depends on its ability to balance the complex, at times conflicting, demands of its extensive network of stakeholders. In this pursuit, the operating practices and corporate policies of the airline are carefully crafted to align with the various expectations. The key stakeholders of the company are:

Company Employees: British Airways recognises its important responsibility of providing its employees with a secure, safe, and challenging workplace. This commitment includes the encouragement of a competitive and inspirational workplace conducive to professional growth and well-being. The company rigidly adheres to international workplace standards of safety, ensuring that its working processes protect its employees at all levels, from ground staff to flight attendants. Furthermore, British Airways continuously invests in ongoing professional growth and skill-upgrading programs, believing that a capable and motivated workforce is the key to delivering above-average service and driving operational excellence. This approach not only satisfies the employee's desire for professional growth and security but also directly contributes to the airline's overall quality of service and productivity.

Company Shareholders: The primary objective of the British Airways shareholders is to realise profitable returns on investment and to experience steady growth in the overall value of the company. For the realisation of such financial objectives, British Airways invests in the ongoing development and implementation of integral business strategies. These are well-crafted for the realisation of short-term profitability as well as long-term sustainable growth, with the objective of maximising shareholder value through prudent financial management, market growth, and operating efficiencies. The performance of the air carrier, as evaluated by industry experts, illustrates its capability to create value, even during volatile market conditions (McKinsey & Company, 2025).

Customers: The responsibilities of British Airways to its broad and diverse customer base are diverse, including open and fair pricing policies, effective communication about its services, and, most importantly, maintaining impeccable safety standards. The airline tries to achieve these objectives by providing competitive packages of services, being transparent about its fare policies and service conditions, and following and frequently exceeding international safety standards and protocols in aviation. Customer satisfaction is increasingly associated not only with price and convenience but also with perceived safety and the overall ethical conduct of the airline (Al-Qirim, 2025). Moreover, the emphasis of the industry's emphasis on enhancing passenger experience, including factors like punctuality and comfort, plays a very important role in customer loyalty (McKinsey & Company, 2025).

Society: Beyond its direct commercial interests, British Airways, a global leader in the aviation sector, is involved in a number of self-regulatory processes in collaboration with other airline operators. Such collective engagement is intended to ensure that the services provided are not just profitable but also ethical and environmentally sustainable. The airline's dedication to Corporate Social Responsibility (CSR) has become increasingly important, as it reflects a new societal expectation for corporations to be giving back to the societies in which they are based while addressing their environmental impact. Recent studies show that there is a decisive shift towards integrated CSR models in the aviation sector with a focus on sustainability, stakeholder engagement, and free disclosure of information (Belyaeva & Belyaev, 2024). Such initiatives involve attempts at carbon footprint reduction, managing waste effectively, and responsible supply chains, progressing from compliance with regulations to active participation in minimising environmental and social issues.

Explain the responsibilities of an organisation and the strategies employed to meet them

Being a large global organisation, British Airways engages in a broad range of Corporate Social Responsibilities (CSR) that go beyond its direct line of business. These responsibilities encompass its obligations to the different stakeholders, the local communities where it operates its activities, its extensive body of customers, and the wider global ecosystem. Meeting these varied responsibilities involves a serious commitment to upholding ethical values and stringent legal codes of conduct that govern its operations.

In order to adequately meet these responsibilities, British Airways has developed and instituted a complete set of strategies into its key decision-making structures for all of its operations. In order to ensure that the firm always meets its ethical responsibilities, it employs a rigorous code of ethics that demands rigorous adherence from all employees and management personnel. This code is a foundational set of ethical guidelines and decision-making principles for the firm. British Airways further demonstrates its commitment to ethical business practices by engaging in self-regulatory strategies within the airline sector, which typically entail doing more than standard regulatory requirements. This assertive attitude is evidence of a robust commitment to sustainability and ethical business, which are growing concerns to the airline's reputation and long-term viability (Belyaeva & Belyaev, 2024; Al-Qirim, 2025).

The CSR strategy of the airline is becoming more proactive, becoming a core part of its business model. This includes huge investments in energy-efficient aircraft as well as operational measures aimed at reducing carbon emissions, which pose a major environmental issue for air transport. British Airways, like other major airlines, knows that environmental sustainability initiatives (ESA) in their CSR strategy make a big difference to their overall corporate image and can even influence customer loyalty (Al-Qirim, 2025). Apart from the environmental dimensions, the airline also attends to the social dimensions of CSR, such as the promotion of employee well-being, diversity and inclusion, and community development programs. There has also been increased emphasis on open CSR reporting, which allows stakeholders to assess the airline's efforts and achievements in these key areas (Belyaeva & Belyaev, 2024). This integrated approach towards CSR is a strategic recognition that ethical approaches to doing business are more than compliance; they are key to building long-term value and resilience in a turbulent global environment.

Describe how economic systems try to allocate resources efficiently

Effective allocation of resources is a basic necessity for any enterprise working in a given economic system, having a major impact on its financial strength and operational efficiency. British Airways, being a capital-intensive airline, is no exception either; it has to manage its finances with extreme care and allocate its resources judiciously in pursuit of keeping its intricate global operations afloat. The economic system in which an organisation operates has a deep impact on the strategies and philosophies that govern resource allocation. Various economic systems handle this crucial job in various ways:

Free Market System: This open economic system, of historical significance in the likes of the European Union, is marked by the free and mostly independent flow of resources, dominated by the forces of supply and demand. Consumer preferences, as reflected in their spending power and inclinations, in a typical free market, determine the goods and services to be produced. Producers determine how the products are produced on the basis of efficiency and profitability, and the allocation of goods to consumers is determined by their willingness and ability to pay. In theory, the system permits the optimal use of resources through competitive forces, but it can create market failures if not properly regulated.

Command Economies: Just the opposite, command economies are defined in terms of the central control of the allocation of resources in situations of scarcity. In these, the allocation of resources is deliberately controlled and directed by central organisations or agencies that run the economic machinery. The state makes choices regarding what goods and services to produce, how to produce them, and to whom to produce them, typically for the purpose of pursuing overall social or political objectives rather than merely pursuing market efficiency.

Mixed Economies: The third category consists of economic systems that combine pragmatically the characteristics of free market and command economies. Mixed economies generally have a dominant private sector in which resources are mainly distributed by markets; however, this sector is set in an instituted chain of government regulations that aim to correct market failures, ensure fair competition, and protect public interests. Concurrently, the public sector, directly controlled by the government, provides essential services or dominates strategic industries that do not seem to be efficiently served by the private sector. The intersection of private enterprise and government intervention contrasts widely among different mixed economies.

British Airways conducts business with a diversified and significant portfolio of assets to underpin its significant international operations. This includes its significant human assets—consisting of pilots, ground staff, cabin crew, and admin staff—its sophisticated aircraft fleet and attendant maintenance equipment, significant financial resources committed to investments and operational costs, and a state-of-the-art technological platform on which ticketing, logistics, and onboard amenities are founded. During economic recession, which has in this case taken the form of the global financial crisis and more recently the COVID-19 pandemic, the airline has been compelled to effectively re-evaluate its financial strategies in a bid to secure the long-term viability and feasibility of its business operations. While most companies around the world were subject to significant financial pressures, which saw them go bankrupt, and almost all business in large economies like the US and UK turned to aggressive cost-cutting as a measure to mitigate the effects of the recession, British Airways has always been determined to walk a balance between financial prudence and ethics (Park et al., 2023; Oliver Wyman, 2023).

For instance, during earlier economic crises, the company deliberately avoided cost-cutting measures that would compromise their ethics or hurt their employees or passenger safety. This included not taking measures such as reducing the hiring of less experienced pilots to cut salary expenses, which would automatically jeopardise passenger safety and compromise the priceless trust that British Airways has established over the decades. Rather, the company took more strategically astute and ethics-friendly means of curbing expenses. These measures involved rationalising its network of flights by cutting down the frequency of or eliminating flights to unremunerative routes, thereby releasing resources for utilisation on remunerative routes. British Airways also systematically introduced low-cost flight packages and promotions to increase demand, expand its consumer base, and increase flight volumes of bookings and plane loads, demonstrating a responsive approach to changing market situations while being true to its core values (Oliver Wyman, 2023). The resilience of airlines to weather crises is also due to their flexibility and the effectiveness of government policy interventions (Park et al., 2023).

Discuss the impact of monetary and fiscal policies on business organisations and their operations.

For many decades, governments worldwide have been instrumental in creating a competitive and fair business environment through the prudent management and application of monetary and fiscal policies. These macroeconomic instruments have a deep and far-reaching influence on business organisations' functional operations and strategic decision-making processes. For British Airways, a leading world airline, knowing and responding to such policy changes is essential for sustaining financial stability, controlling operating expenses, and coping with the intricacies of the global economic scene.

Fiscal Policy: Fiscal policies, typically designed and enforced by national governments, consist of a variety of legal frameworks of an organisation's expenditure, government expenditure, and taxation policy. Fiscal policies directly affect business organisations in two aspects: First, fiscal actions on a comprehensive scale affect the economy at large, including modifications in corporate tax rates, government investment in developing infrastructure or modifications in national debt management policy. Such economy-wide fiscal policies can affect consumer purchasing power, the overall growth of the economy, and the overall cost of doing business, all of which indirectly affect British Airways' potential revenues and operating expenses. Second, there are fiscal policies specific to industries that directly affect and impact airlines' operations. These can include particular taxes on aeronautic fuels, airport fees, or government grants and bailouts for the airline sector, particularly in times of crisis. For example, during the COVID-19 pandemic, government economic support policies and lockdown measures generated a significant, albeit heterogeneous, effect on airline stock returns, thereby demonstrating the direct impact of fiscal interventions (Park et al., 2023; OECD, 2020). British Airways, therefore, needs to vigilantly track and align itself with these fiscal policies, as they are likely to affect its financial resource management, investment policy, and overall profitability.

Monetary Policy: In advanced economies, generally, it is the central banks, like the Bank of England in the United Kingdom, that take on the critical responsibility of formulating and executing monetary policies. The basic aims of these policies are to maintain price stability, control inflation, and ensure sustainable economic growth. Monetary policies exert their most powerful influences on the cost and availability of money in the economy through influencing key interest rates (like the base rate) and managing the supply of money. For example, high interest rates increase the cost of borrowing to firms, and consequently, the ability of British Airways to fund purchases of new planes, invest in technological upgrading, or roll over outstanding debt. Low interest rates, on the other hand, might stimulate investment and consumer spending, which might stimulate demand for air transport. As British Airways is an organisation with high capital expenditures and high sensitivity to its financial well-being for servicing services and resource allocation, the viability of the airline's operations cannot help but be linked to these monetary policy decisions. The availability and movement of money in the market, which are directly influenced by central bank actions, determine the liquidity and financial sensitivity that are available to the airline, which influences anything from fuel hedging strategies to management of foreign exchange.

Evaluate the impact of competition policy in combination with different regulatory systems on the business of a given organisation.

British Airways, with its primary airline hub at London Heathrow Airport and headquarters in Harmondsworth, England, operates mainly in a regulatory environment and market conditions under the control of the policies of the UK government. The United Kingdom traditionally has had a wide and complex regulatory structure for equitable competition and trade, based on a firm conviction to create a competitive and fair business environment.

The UK government's competition policies are designed to put any company, regardless of size or market standing, in a position to compete on level terms, thus preventing anti-competitive practices and consumer detriment. British Airways is forced to compete with other airlines in the market on the grounds of genuine merit, such as higher operating efficiency, higher diversity of services offered, consistently high service quality, transparent and competitive pricing, and high customer focus in the business strategy. The impact of UK competition policies on British Airways' business is visible quite evidently in some of the most important areas of its strategic and operational decision-making:

Competitive Pricing: With a highly competitive market environment, British Airways is constantly under pressure to maintain attractive and competitive price levels for its services. This is not merely a business strategy; it is also a regulatory mandate, with anti-competitive behaviours like predatory pricing and price fixing being strictly forbidden. The need to maintain attractive fare levels guarantees British Airways to be a competitive and sustainable choice for customers, thus guaranteeing a healthy market with price as a key differentiator.

Enhanced Quality: Since the UK competition laws explicitly disallow any kind of unfair advantage or market manipulation on the part of dominant firms, British Airways has no choice but to fall back on the inherent quality of its products in order to create and maintain consumer confidence and loyalty. Such a regulatory framework is a powerful motivation for the firm to continually enhance its delivery of services, such as the effectiveness of its check-in procedures, the atmosphere of its cabins, the punctuality of its flight schedules, and the responsiveness of its customer services. Emphasis on quality thus becomes an imperative of strategy for differentiation in an oversaturated market.

Innovation: The United Kingdom's competition policies favorably encourage British Airways to innovate continuously. This is not only the innovation of technology but also the innovation of new services, product improvement, and the research of innovative operating efficiencies. Innovation is key to British Airways to maintain its competitive edge, win new customers, and keep existing customers through improved value and experiences. This is done through the development of new technologies in the form of booking systems, in-flight entertainment, and managing operations, and the development of more sustainable aviation solutions, which are increasingly being demanded by regulatory authorities and consumers (Airlines for Europe (A4E), 2024). The competitive environment in Europe, driven by the single aviation market, has created fierce competition, leading to lower prices and more destinations for consumers, forcing airlines like British Airways to innovate continuously.

Task 2: Explain how market structures determine the pricing and output decisions of businesses

The life of the product or service is at its peak at the time of market introduction, following a series of strategic decisions that are of critical importance, including determination of output and price, which are of the highest concern. The decisions are not arbitrary but thoughtful in order to enable the product or service to achieve its goal of market domination and profitability. Overriding considerations in the decisions are the size and composition of the target customer base, their ability to pay, the cost of producing and delivering the product or service, and the desired profit margins.

For British Airways, output management—flight capacity, frequency, and routes, along with price policies, in particular, ticket prices, is a parallel and related process. These two sets of decisions are dependent on each other; an increase in the price of a service would traditionally suggest a reduction in quantity demanded, which may lead to a reduction in required supply, and conversely. The prevailing market nature plays a significant role in the extent of control British Airways has over these required decisions.

In the theoretical scenario of perfect competition in the market, individual firms, like airlines, would enjoy limited freedom in their prices; they would have to follow the current market price. Conversely, the airline industry, particularly that of a major player like British Airways, is in a more complex market structure, usually referred to as an oligopoly. In an oligopolistic market, there are very few leading firms that dominate the industry, and the price moves of British Airways significantly rely on those of its leading competitors. Any price move by British Airways will tend to elicit a reaction by the competing firms, thereby necessitating careful strategic examination of competitive reaction. This is usually referred to as price leadership, implicit collusion, or intense price wars, all of which affect the eventual prices and output levels.

Alternatively, under a theoretical monopoly market structure—where British Airways would be the sole provider—then the airline would have significant control of price as well as output, and would need to adjust only for the elasticity of demand. Such is improbable and is typically negated by regulatory agencies monitoring competition. Whatever the prevailing market structure, a key rule of thumb for British Airways is to find an output level which equates the marginal revenue of selling an additional unit of service (an additional seat sold, for example) with its marginal cost. Pricing must then be calculated to include this optimum level of output, maximising aggregate profitability. The application of break-even curves, which equate economic performance to yield, load factor, and unit cost, is a helpful tool for airlines to maximise operational performance in this very competitive environment, especially when other variables, such as environmental protection legislation, affect costs (Jaume & Alonso, 2024).

Explain the way in which market forces shape organisational responses

Market forces exert a powerful influence on an organisation's business transformations and strategic developments. In British Airways, these forces are mainly exerted through the dynamic between demand and supply, as well as the success of customer-centric marketing initiatives.

Supply is the overall capacity of available services offered by British Airways in the marketplace, the number of flights to destinations, the seat kilometres available (ASKs), and the size of the overall fleet. Demand for the product, on the other hand, is the overall number of services (e.g., bookings) wanted by consumers. In any given market scenario, the relationship between demand and supply is natural. British Airways is always striving to achieve a state of equilibrium, or optimal balance, between its supply of available flights and demand in the marketplace. This entails synchronising its routes, flight schedules, and capacity very carefully to align with consumers' booking and choice patterns. For example, if demand on a route is growing, British Airways can add flight frequency or use larger aircraft to satisfy that demand, maximising its seat kilometres available (ASKs). When demand falls, the airline can cut capacity to prevent flying with empty seats, which are a heavy cost. British Airways flight pricing also greatly influences demand for its services; typically, low fares can encourage increased demand, and vice versa. The relationship between supply and demand in the airline industry has significantly changed over the past few years, with supply levels tending to be below desired levels due to issues such as aircraft delivery delays, with the result being increased ticket prices (McKinsey & Company, 2025).

Marketing is a key factor in both the creation and maintenance of equilibrium between supply and demand. Proper marketing and positive campaigns can significantly influence and propel demand for British Airways flights. This, in turn, forces the company to make adjustments to its supply in an effort to capitalise on the heightened consumer demand. Modern marketing approaches involve not only traditional advertising but also the delivery of customised products and the maximisation of ancillary service pricing, which are key contributions to airline revenues and customer affinity (McKinsey & Company, 2025). Through its complete understanding and strategic intervention in these market forces, British Airways can maximise its operating efficiency, maximise customer satisfaction, and secure its competitive advantage.

Assess how business and cultural environments affect the behaviour of an organisation you prefer

A business organisation is intrinsically linked with and closely dependent upon its external environment, both its immediate business environment and broader cultural context. The different environmental factors and the complex web of relationships can be examined in depth through a macro and micro environmental analysis of British Airways.

Micro Environment: British Airways' micro environment is comprised of the internal and immediate external stakeholders with whom the firm has a direct interaction. They include its employees, customers, suppliers, and competitors. The environmental dimension of culture is best described by the firm's human resources. The multicultural origin of British Airways' employees, particularly in a global airline setting, plays a significant role in the company's work ethic, communication style, and, consequently, its decision-making frameworks. Decisions are likely to require the input of people from different cultural backgrounds, thus requiring a management plan that is both culturally adaptive and inclusive. This internal cultural structure dictates the airline's operating policies, stakeholder interaction, and ability to adapt to change.

Macro Environment: The macro environment includes the broader external drivers influencing the activities of British Airways, forces over which the organisation typically has no direct control. These forces necessitate constant strategic reactions and adaptive choices. Utilising a PESTEL analysis provides a holistic framework for analysing the macro environment of British Airways:

Political Factors: The aviation industry, both in the United Kingdom and globally, is considerably influenced and controlled by political decisions. Some of these include air transport government policy, international agreements, trade flows, and political conditions in major regions. Large airlines like British Airways will often possess strong lobbying influence in most scenarios; however, they are subject to geopolitical events, like travel restrictions or trade conflicts, which can have a considerable impact on passenger loads and operating costs (S&P Global Ratings, 2025). Political instability in certain regions may result in route suspension or increased security concerns, thus affecting profitability and operating approaches.

Economic Factors: The airline industry has a high level of sensitivity to changes in the economic environment. For British Airways, key economic factors are exchange rates of currencies, which have a direct impact on fuel prices (historically priced in USD) and revenue earned from foreign markets, as well as consumer disposable incomes and purchasing power. Economic recessions or downturns can significantly reduce demand for air travel, especially in the corporate and premium leisure travel segments (J.P. Morgan Research, 2025; Oliver Wyman, 2023). Economic growth phases, conversely, tend to increase passenger numbers and profitability. Further, fuel prices, influenced by global oil market conditions, are a primary cost burden on airlines and are subject to economic shifts.

Social factors comprise demographic changes, lifestyle changes, consumer attitudes, and cultural values. For British Airways, this means adjusting its service and promotional strategy to suit societal commonalities and public shifting expectations. This involves catering to a range of passenger segments, responding to growing public demand for eco-friendly travel options, and responding to shifts in travel behaviour (e.g., post-pandemic recovery between business and leisure travel) (Oliver Wyman, 2023). Social media and public opinion also play an important role in brand identity and customer loyalty.

Technological Factors: The character of the aviation industry is its reliance on advanced technology. British Airways is required to continuously invest in and utilise extremely reliable and the newest technologies to increase safety, maximise operational effectiveness, improve customer satisfaction, and increase convenience. Examples include technological developments in aircraft design (e.g., fuel-efficient engines), air traffic control systems, electronic ticketing and check-in processes, in-flight connectivity, and data analysis to provide personalised services and route optimisation. Technological change is critical to competitive success and regulatory requirements.

Environmental Factors: The British government and foreign agencies have established numerous environmental protection laws and regulations that British Airways has to comply with strictly. These include carbon emission cutting measures, noise pollution control, and waste disposal procedures. The airline is compelled to invest in eco-friendly and fuel-efficient planes as well as engage in "green flying" procedures that, although expensive, are necessary in a bid to have it cover regulatory requirements and respond to clients' climate change concerns (Jaume & Alonso, 2024).

Legal Implications: As a corporate entity, British Airways is under the obligation to conduct its business operations strictly in accordance with a vast array of UK as well as global legal rules. They include taxation laws, consumer protection laws, fair trading laws, competitive trade laws, labour laws, and aviation-related safety laws. Complying with these legal rules is obligatory and has a bearing on every aspect of the airline's business, ranging from employment practices to route clearances and consumer rights.

Discuss the significance of international trade to UK business organisations

For British Airways, a UK-based airline with worldwide coverage, international trade is not only significant but vital to the viability of its operations and strategic growth. Although its primary business entity and headquarters are based in the UK, a significant portion of its operations—approximately half, as almost all international flights depart from or arrive in foreign countries—are naturally tied to the impacts of international trade. Such worldwide coverage demands the development and implementation of business strategies that go beyond the limits of the UK region proper.

To effectively manage its services and operations in different foreign markets, British Airways must have a significantly localised approach for analysing the market compositions of its major destinations. This must involve a comprehensive understanding of the local consumer preferences, cultural sensitivities, regulatory environments, as well as the competitive landscapes of each foreign market. Based on the findings of these analyses, the airline must adapt to local traditions, develop unique ethical standards in concordance with the values of the local population, and tailor its service offers and advertising campaigns accordingly.

International trade affects British Airways directly in various ways:

Market Access: The prevalence of international trade agreements and open skies policies permits the entry of British Airways into international markets, thereby allowing the operation of routes and the receipt of income that transcends its domestic operations. Trade restrictions or protectionist policies could severely impede this accessibility (S&P Global Ratings, 2025).

Revenue Generation: International passenger and freight services contribute the majority of British Airways' revenues. The ability to connect key world cities stimulates tourism, business, and freight movement, all of which contribute to the economic well-being of the airline.

Supply Chain: The aviation transport business is dependent on a highly developed international supply chain of aircraft, spares, fuel, and services. International trade makes it possible to purchase such vital inputs cheaply, frequently from different nations, lowering costs and promoting continuity of operations. Global trade disruption, e.g., tariffs or supply chain congestion, can increase costs and operating difficulties (S&P Global Ratings, 2025).

Economic Contribution: British Airways, as an international carrier, is a key propeller of international business for the UK economy. It supports the promotion of both exports and imports, enhances tourism, and enhances international connectivity, thus making a significant contribution to the gross domestic product and employment rate of the UK (Airlines for Europe (A4E), 2024). The role of the airline in promoting the conveyance of people and goods across borders highlights its primary function in promoting the UK's position in the international economic order.

Explain the influence of international factors on UK business organisations

In today's business environment, characterised by the fast-paced pace of globalisation, global forces have a wide and far-reaching impact on all the regional players, including United Kingdom-based companies like British Airways. With its huge business activities spanning more than one continent, British Airways is highly vulnerable to the influence of these interdependent global forces. Hence, the airline must continue monitoring and adjusting its plans in order to offset risks as well as capitalise on opportunities provided by these global forces.

Important global factors that substantially influence the operational strategies of British Airways are:

Exchange Rates: Changes in world exchange rates have a direct bearing on British Airways' financial well-being. A depreciating British Pound against similar currencies like the US Dollar (in which aircraft acquisition, leasing, and frequently, fuel, are denominated) can dramatically escalate operating expenses and capital outlays. A strong Pound, on the other hand, can make foreign travel cheaper for UK tourists and potentially stimulate outbound traffic. Foreign exchange risk management is an ongoing and normal business activity for the airline.

Global Financial Crises: The air transport sector is greatly vulnerable to global economic recessions or downturns in finance. They are capable of causing drastic changes in consumer disposable incomes and reducing corporate travel expenditures, thus resulting in a steep fall in air transportation demand. For instance, in the COVID-19 pandemic, the international airline sector experienced record financial losses and mass fleet groundings, which required government intervention and forced drastic operational adjustments (Park et al., 2023; Oliver Wyman, 2023). British Airways needs to formulate elaborate contingency strategies and financial buffer plans to effectively navigate through such turbulent times.

Political Instability: Geopolitical events and political unrest in certain parts of the world can have a direct and significant impact on British Airways. Such impacts include wars, civil unrest, terrorist risk, or sudden changes in government policies related to air travel. Such instabilities can translate to route suspension, increased security expenses, loss of customer confidence, and adverse impacts in specific markets (S&P Global Ratings, 2025; Al-Dhaafri, 2022). The airline must constantly keep track of geopolitical threats and implement necessary alterations in its network and security measures.

International Aviation Regulations and Policies: Apart from meeting local requirements, British Airways must also contend with the intricate web of international aviation policy and agreements established by institutions like the International Civil Aviation Organisation (ICAO) and the International Air Transport Association (IATA). International regulations encompass a range of factors, such as traffic management, security measures, environmental regulations (e.g., carbon emissions requirements), and passengers' rights across borders. Changes in these international policies can require significant operational and investment modifications for the company.

Pandemics and Health Crises: The COVID-19 pandemic serves to demonstrate how international health crises can have a major and immediate impact on the global airline industry. International travel restrictions, border closures, and public health-oriented issues can lead to a de facto grounding of air travel, precipitating dramatic revenue losses, as well as operational disruptions (Park et al., 2023; Al-Dhaafri, 2022). British Airways needs to develop thorough crisis management plans and adapt to evolving public health measures to protect passengers and staff while maintaining operational continuity in such situations.

British Airways consistently develops and revises its strategy to respond to these continuously changing global conditions in an effective and productive manner. It achieves this through constantly collecting market intelligence, effective risk management strategies, flexible fleet allocation, and close cooperation with global regulatory bodies and industry associations.

Evaluate the impact of European Union policy on business organisations in the United Kingdom.

Historically, British Airways, being a United Kingdom-based organisation, was under the regulatory ambit of the European Union owing simply to the UK's erstwhile status as a leading principal member state. Irrespective of the UK's own exit from the EU (Brexit), it is crucial to note the historical and ongoing role of EU policy, particularly regarding market structures and trade regulations, as such data are essential in establishing the broader regulatory environment that affects UK business organizations and their integration with the European region. While direct regulatory compliance under certain conditions has changed post-Brexit, the general assumptions and competitive forces driven by the EU are still very much prevalent within the broader European air transport sector.

During its membership of the United Kingdom, British Airways had to abide by a variety of trade directives and regulations set by the European Union. These ranged from general business ethics, occupational health and safety standards, and price controls to quite substantial fair trade legislation intended to encourage fair competition among organisations conducting business in the EU single market. Adherence to the EU trade regulations was crucial to the successful business of British Airways in the European market. The following aspects of UK-based business organisations, particularly British Airways, were significantly affected by EU policies:

Market Structure: The single market of the European Union has, in the past, encouraged a free market trading environment. Such a regulatory setting had a significant influence on UK business organisations, especially British Airways, by encouraging fierce competition and forcing them to adapt their business strategies in harmony with driving forces in the market, such as consumer preferences, purchasing power, and supply and demand dynamics among member states. EU deregulation of the airline industry has encouraged fierce competition among carriers, as consumers get to enjoy cheaper fares and more destinations, directly shaping the competitive tactics of British Airways (Airlines for Europe (A4E), 2024).

Competition Policies: The European Union has set up a strong and active competition policy framework, intended to protect consumer rights and discourage the formation of monopolies or cartels that will repress competition. The policies are also intended to assist new and emerging competitors by stopping the larger companies, like British Airways, from gaining unfair advantages over newer or smaller players. For business organisations in the UK in the EU, this meant strict adherence to anti-trust laws, merger control rules, and state aid rules, thereby guaranteeing a fair competitive environment and stimulating lively competition.

Regional Policies and Access to the Single Market: For European Union member states, a number of regional policies and directives were established at the EU level, which had to be followed by UK business operators. These included environmental rules, consumer protection, and labour laws that sought to harmonise practice in the bloc. Of more importance, EU membership gave British Airways unrestricted access to the massive European single market, allowing it to fly freely within member states without cumbersome regulatory barriers, a right re-negotiated after Brexit. The EU's desire to create a competitive air transport industry able to compete with the world's best is a core policy objective (Airlines for Europe (A4E), 2024).

Conclusion

This report carried out a thorough examination of the intricate business environment of British Airways, delving into the internal and external factors that have a significant influence on its operations and strategic decision-making processes. A review of the airline's organisational hierarchies and resource-allocative policies has been undertaken, which reveals the ways in which these internal structures are shaped by and attuned to the broader market and economic conditions. The examination also highlighted the importance of local and global determinants in the formulation of British Airways' strategic options, demonstrating the necessity for constant adaptation to the more integrated global environment. Finally, the report evaluated the organisation's compliance with Corporate Social Responsibility (CSR), which shed light on its ethical considerations, environmental strategies, and broader societal contributions and identified these as increasingly important drivers for lasting business prosperity and stakeholder confidence. The interplay of intricate market dynamics, regulatory frameworks, and global economic transitions compels British Airways and other large multinational companies to be responsive, innovative, and highly attuned to their complex operating environment in order to achieve lasting profitability and stability in the context of changing challenges.

About the Author

Oliver Thompson is a seasoned aviation analyst and marketing strategist, based in London. With over a decade of experience dissecting airline business models and consumer behaviour, his insights provide a fresh perspective on the dynamic challenges and innovative solutions within the global aviation industry, particularly focusing on legacy carriers like British Airways.

References:

1. J.P. Morgan (2024) provides a strategic outlook on the global airline industry’s recovery and profitability challenges, https://www.jpmorgan.com/insights/global-research/travel/airline-outlook

2. McKinsey & Company (2023) explores whether the global airline sector can maintain its upward trajectory post-COVID, https://www.mckinsey.com/industries/travel/our-insights/can-the-global-airline-industry-continue-its-climb

3. Oliver Wyman (2023) delivers a detailed economic analysis of the airline industry’s performance and forecasts, https://www.oliverwyman.com/our-expertise/insights/2023/may/airline-economic-analysis-2022-2023.html

4. ResearchGate (2022) examines CSR practices across the aviation industry with global case studies.  https://www.researchgate.net/publication/358043497_Corporate_Social_Responsibility_Practices_in_the_Aviation_Industry

5. ResearchGate (2024) analyzes emerging CSR trends in airlines through a bibliometric study, https://www.researchgate.net/publication/379325231_Corporate_Social_Responsibility_Trends_in_the_Airline_Industry_A_Bibliometric_Analysis

6. OECD (2020) outlines the impact of COVID-19 on aviation and offers policy recommendations for recovery, https://www.oecd.org/en/publications/covid-19-and-the-aviation-industry-impact-and-policy-responses_26d521c1-en.html

7. A4E (2023) presents a roadmap for a competitive and efficient European aviation industry, https://a4e.eu/publications/achieving-a-competitive-and-efficient-aviation-industry-in-europe/

8. S&P Global (2022) discusses tariff risks and credit challenges facing global airlines, https://www.spglobal.com/ratings/en/regulatory/article/250422-credit-trends-global-airlines-brace-for-tariff-uncertainty-s101616816

9. Economic Research–Ekonomska Istraživanja (2022) provides academic insight into airline industry sustainability and strategy, https://www.tandfonline.com/doi/full/10.1080/1331677X.2022.2081234

Also Read:

1. Unit 3 Organisations and Behaviour Assignment CAPCO & McDonald’s
2. Unit 12 Hospitality Provision in Travel Tourism Sample Assignment
3. Unit 4 Marketing Principles Assignment Aston Martin
4. Unit 3 Organisation and Behaviour Assignment - CAPCO
5. Unit 3 Human Resource Management Assignment Sainsbury
6. Unit 11 Research Project Assignment - Handicrafts Industry
7. Unit 22 Managing Human Resource Assignment - ASDA
8. Assignment on HRM in Tesco
9. Unit 23 Managing Human Resources Assignment Copy 5 - McDonald’s
10. Unit 18 Human Resource Management Assignment - Four Season Hotel